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Sustainable Finance

Onward to Business Sustainability

Global Initiatives | Jun 09, 2020

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Photo by Victor Garcia on Unsplash

This article was produced and published by Racia Yoong and Vinnie Chua from Global Initiatives. 

“If we have to turn to resilience as a last resort, that means we haven’t done enough to adapt or prevent it from the beginning.”

While climate change remains a matter of debate for most politicians and the world is grappling with the global pandemic, investors are increasingly decisive, holding funds that count as “green finance”. 

This model of investment, “green finance”, has become a key lever to influence sustainable outcomes. 

ESG (Environmental, Social, and Governance) explains the need for a different kind of business solution. Essentially, ESG has been identified as the three pillars of sustainability. We take traditional business philosophies and processes and introduce ESG considerations. 

What is clear of these ESG pillars is that it presents companies with a means to measure the impact on financial performance, the focal point for investors, whilst accounting for sustainable investment.

That said, sustainable investing is using one’s wealth to create a positive impact, and this appeals strongly to investors who want a direct and measurable impact from their investments. 

These Numbers Don’t Lie

In the last two years, sustainable investments across the globe have grown by 25% to a shocking $23 trillion. 

A study done by KPMG International showed that 36% of C-suite and board members felt that investor pressure had increased the company’s focus on ESG.

This is further supported by Morgan Stanley’s poll which found that among 1000 individual investors surveyed, 75% said they are interested in sustainable investing and adopting its principles as part of their strategy and 71% believe companies that focus on the environment and social goals will earn better returns.

Photo by Joshua Hoehne on UnsplashPhoto by Joshua Hoehne on Unsplash

All these figures demonstrate that investors tend to favor companies with strong ESG performance and that there is a strong belief that placing ESG as a priority will be profitable in the long run. 

Growing Hunger Among Millennials for Corporate Responsibility

Increasingly, consumers are calling on businesses to play their part in tackling global warming, with companies’ environmental credentials coming under greater scrutiny. 

This significant shift in the public consciousness, coupled with more stringent government regulations on climate change, has prompted businesses of all sizes to review their ESG policies, putting sustainability firmly at the heart of their operations.

In fact, with the growing number of younger consumers acknowledging and educating themselves about sustainable alternatives, more millennials are found to prefer getting hired at organizations with a key focus on corporate philanthropy or corporate social responsibility. 

Another study demonstrated that employees in responsible companies tend to have increased productivity, allowing for the business to be more efficient and profitable. This figure is 16% higher than their peers working in a company that does not prioritize sustainability.

An Extraordinary Opportunity

Likewise, any successful, sustainable business opportunity considers value creation for all its shareholders, customers, suppliers, employees, and communities. 

Building and leading a business involved in getting these values in place requires moving in a different direction, one that considers opportunities beyond self-interest and greed. 

As more and more companies are aligning their business practices with the UN Sustainable Development Goals (SDGs) in a collective contribution to achieving a sustainable future, businesses are presented with an extraordinary opportunity to make a positive impact on sustainability. 

That said, contributions to sustainability is a collective, continuous effort across all levels of government, organizations, and individuals. While governments are responsible for creating a leveled playing field for businesses to designate more sustainable operations, businesses can choose to become a force for good. 

Photo by T.H. Chia on UnsplashPhoto by T.H. Chia on Unsplash

CDL Chief Sustainability Officer, Esther An, spoke at a recent GRI webinar on waste management and shared that CDL was an early pioneer in sustainability reporting, basically, a front runner in integrating ESG as far back as 1995, before sustainability in business and society started trending. 

Ms. An believes that the key to an organization’s success is in promoting a multistakeholder approach to sustainability while embracing and anticipating new trends, even if it appears threatening or uninviting at first. 

If all businesses can recognize that the likely cause of our inaction to sustainability can contribute to or worsen the detrimental effects of climate change, they will act immediately, because climate change will have a direct impact on business ambitions in the future. 

A Force For Purpose 

The pandemic of late has shown businesses the urgency for a response plan to the climate crisis with ESG leaders seen to outperform other markets during these uncertain times. 

In theory, the success of an economy hinges on the idea of monetary growth and profit. But GDP growth is a narrow goal that is inherently unsustainable with a projected trajectory that leads to more detrimental effects on our planet as a result of exploiting Earth’s finite resources.

In practice, though, while not to say profit is less of an importance, businesses are driven by a purpose and motivation to make the world a better place with their product or service.

Photo by Nico on UnsplashPhoto by Nico on Unsplash

A new story has emerged that businesses are an integral part of society. That makes business inseparable from sustainability. 

So when sustainability and business become not an oxymoron but a pleonasm, we are changing the narrative that business is more than just money and profits, but primarily for purpose. 

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